In a major reprieve for Calcutta Electric Supply Corporation (CESC) and Tata Power, Jharkhand High Court on Thursday upheld their claims to distribute power in state capital Ranchi and steel city Jamshedpur, respectively.

Revoking a May 6 order of Jharkhand Urja Vikas Nigam Limited (JUVNL), which had scrapped distribution rights of the two power majors, Justice Rongon Mukhopadhyay - in his judgment running into more than 70 pages - observed that the matter should be "decided (by JUVNL) and disposed of immediately as it involved public interest".

CESC and Tata Power had entered into an agreement with the erstwhile Jharkhand State Electricity Board (JSEB) for supply in the twin cities. The agreements were signed on December 5, 2012, after the two companies were found eligible in a tender process.

The dispute between the companies and JSEB-turned-JUVNL arose on statements made by then energy minister Rajendra Prasad Singh, which was widely publicised in the local media. On July 4, 2014, the minister had directed JUVNL to cancel the tenders under which the job of power distribution was offloaded to private parties.

The minister had further directed that a notice inviting fresh tender be floated after cancellation of the previous ones in public interest. Both CESC and Tata Power then pleaded in court that they had already invested crores for individual set-ups in Ranchi and Jamshedpur and the decision of the state would adversely affect their interests.

The government, on the other hand, refuted the argument and contended that the two companies had flouted the norms of the notice inviting tenders in the first place and did not deserve to be allowed to supply power.

The state counsel even argued that principles laid down by the Central Vigilance Commission (CVC) on bids from prospective clients were not followed in letter and spirit, which rendered the tender process illegal.

The government contended that since the tender was deemed wrong owing to non-compliance of CVC norms, the subsequent agreements ought to be scrapped. It also stressed that though the agreements had been enforced from December 2012, no active and fruitful work had been done by the two franchisees.

The high court was, however, not satisfied with the state arguments and observed that CESC and Tata Power had been declared successful bidders and could not be disallowed from supplying power, which would otherwise be against the principles of natural justice.

"Our stand has been vindicated," a jubilant CESC vice-president Sugata Ghosh told The Telegraph soon after the judgment. "Justice has prevailed. We will take our next step after we receive a written proof of the high court order. We shall extend all co-operation to the state government and JUVNL," he added.

Vivek Singla, CEO of Tata Power, also expressed his happiness in similar terms.

Rahul Purwar, managing director of the state power distribution company, said they would honour the HC order.